Levels to watch: FTSE, DAX and Dow

The final day of the month finds the FTSE 100 stalled around 6400, with the DAX unable to push much higher either. The Dow Jones, however, still looks in good form. 

A man looking at a multiple charts
Source: Bloomberg

FTSE remains in consolidation phase

This morning’s battle for 6400 appears to be resolving to the downside. The choppiness of the past week has obscured the fact that upward progress of any solid kind has been distinctly lacking, with 6440 marking the real limit of the bulls’ ambitions. However, as we look into the next month, the bears will need to get this index back below 6300 to really prove that they are back in control. This would then allow for a possible move back towards 6207, and then 6100. If we cannot remain below 6300 then the current consolidation is likely to continue. Buyers need to get the index moving back beyond 6500 to preserve upward momentum. 

DAX eyes 10,900

It has been a good month for the DAX, with around 12% gained since 1 October. However the past week has seen the index meandering between 10,700 and 10,900. As with the FTSE, these levels need to be meaningfully broken to establish a new direction. If we can move above 10,900 in the short-term then the 200-day SMA at 11,078 becomes a possibility, which would clear the way to the August high at 11,600. Downside targets would be around 10,554, and if this is lost we could see a swift dip back to 10,107.

Dow likely to see more gains

October has been almost a one-way move for this index, after it bounced off 16,000 at the end of September. The daily RSI has become overbought here for the first time since December 2014, but for now the index shows little sign of stopping. While a pause for consolidation is likely, we still expect further gains back above 18,000, with sellers needing to push the index back below the 200-day SMA at 17,580 if they are to create decent selling momentum. For now, the 100-hour SMA (17,667) continues to provide support as a rising trendline, so dips back towards this level should be watched carefully for potential entries. 

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